Inheritance Tax Act 1984 section 35

Conditional exemption on death before 7th April 1976

Section 35 provides transitional rules for properties that were conditionally exempt from tax on a death occurring before 7 April 1976 under the former Finance Act 1975 provisions, and explains how those properties are treated if a chargeable event later occurs.

• Schedule 5 governs the inheritance tax treatment of properties whose value was excluded from the transfer on a death before 7 April 1976 under the old Finance Act 1975 conditional exemption rules (sections 31 to 34).
• Where a chargeable event occurs in respect of such a property and no tax has yet been charged on it, HMRC may elect whether to charge tax under the current rules (section 32 or 32A) or under Schedule 5.
• References in section 33(7) and (8) to conditionally exempt transfers, chargeable events and the resulting tax charges are extended to include transfers that benefited from the old Finance Act 1975 conditional exemption and events giving rise to a Schedule 5 charge.
• This means the tax credit provisions in section 33(7) and (8), which prevent double counting where there have been successive chargeable or potentially exempt transfers of the same property, also apply to properties originally exempted under the pre-7 April 1976 regime.